Return to Transcripts main page
AIG CEO Set to Testify on Capitol Hill; AIG Bonus Fallout Continues as Angry Americans Sound-Off; Unemployment into Opportunity; Survival Guide Investments; Bailed-Out CEOs Become Target of Jokes; Grocery Cash Crunch
Aired March 18, 2009 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Good morning. Thanks very much for being with us on this Wednesday, it's the 18th of March. John Roberts together with Kiran Chetry. Good morning to you.
KIRAN CHETRY, CNN ANCHOR: Good morning. All the talk, of course, AIG.
ROBERTS: Oh, it is.
CHETRY: I wonder how the "New York Post" feels about the bonuses. "Not so fast, you --"
ROBERTS: You know, there's never any room for ambiguity on the cover of the "New York Post."
CHETRY: Yes. Meanwhile, it's not just the New York Post. A lot of outrage from the White House to the walls of Congress and perhaps today something will be done about it.
ROBERTS: Well, we'll see, you know, because there's a big hearing today.
CHETRY: That's right. We're talking to both Senator Grassley a little bit later, who had some very interesting comments about it.
ROBERTS: Barney Frank will be here as well. We've also got Donald Trump on the line with us, and we'll ask him, too, about that condo development in Baja, Mexico that went...
CHETRY: A lot going on. Well, we are on the ROAD TO RESCUE here on AMERICAN MORNING today. All week we're taking aim at the economy. And this morning we're jam-packed with the kind of coverage that you won't see anywhere else on TV.
No empty economic headlines here. Instead, stories, guests, as well as tips to help you and your family navigate this financial downturn.
We have Christine Romans and Gerri Willis again with us today and the entire CNN money team. They're ready to go. They're up and answering questions. Gerri is actually answering questions live on Twitter and Christine as well. And what really separates our show from everyone else is that we love to include your voice in our coverage. We got a record number of calls yesterday to our AMFix hotline. The number is 877-MY-AMFIX. Over 3,500 calls, in fact, yesterday and we're ready for more today. We've been playing some bits of what people have been saying. You guys have a lot of great stuff to say, so please call in.
Also that said, we're going to get right to it this morning. The big stories that we're going to be breaking down for you in the next 15 minutes, taking aim at AIG. There are brand new details that we have this morning of the government's plan. Actually there's a few plans now in the works to try to hit the bailed out insurance giant in the wallet.
Treasury basically trying to fine the company for its big executive bonuses. And also this morning, when it comes to those big bonuses, a lot of people asking who knew what and when. The Obama administration says that it just learned about the payouts last week. We, though, have dug up a tape that shows the topic being discussed nearly two months ago here on CNN. We'll dig deeper on that.
Also, is it shovel-ready or not? The federal stimulus money was supposed to fund infrastructure projects that would generate jobs immediately in towns and cities across the nation. But the shovels seem to be on stand-by in many places, so what that means for the economy and your money.
ROBERTS: Now we begin this morning with brand new developments in the AIG story.
Treasury Secretary Tim Geithner now promising to hit the bailed out insurance giant with a financial one-two punch, demanding that the company hand over $165 million. That's the same amount that it gave in executive bonuses. Geithner is also planning to withhold $165 million from the latest round of taxpayer bailout money on its way to AIG.
But none of this targets executives who got a bonus. All of them will keep their money and that's likely to turn Capitol Hill into a Capitol grille when AIG's CEO, Ed Liddy, goes before lawmakers this morning.
That hearing still four hours away, but this morning our iReporters are already sounding off.
(BEGIN VIDEO CLIP)
JIM MORRISON, CNN IREPORTER: Can somebody tell me why they aren't handing out pitch forks right now, and we are not charging AIG headquarters en masse? Seventy-three of these executives received $1 million or more, and that includes 11 of them who left AIG. So I guess that flushes the argument that they need these bonuses to retain the best and the brightest.
(END VIDEO CLIP)
ROBERTS: The view from one of our iReporters there. Carol Costello is live in Washington for us this morning.
Carol, the anger still very much alive across the nation. It's almost like Pat Buchanan's presidential campaign where he talked about the peasants with pitch forks coming over the hill.
CAROL COSTELLO, CNN CORRESPONDENT: Oh, my goodness. Well, you heard that iReporter. That means voters really want answers, and they're not getting any satisfactory explanations from the Obama administration. And you know, that could make things very difficult for the president down the line.
UNIDENTIFIED FEMALE: American people are outraged.
UNIDENTIFIED MALE: Outrageous.
UNIDENTIFIED MALE: Absolutely livid.
COSTELLO (voice-over): Anger over AIG is palpable. AMERICAN MORNING's phone lines lit up.
JOE, ROCHESTOR, NY: It's disgusting that they're allowed to continue to do business. Let them go down.
ELLA, DENVER, CO: Everybody else is hurting. Why can't they hurt with the rest of us?
BILL, OHIO: I'm absolutely nauseated and disgusted. I think these people should be tried for treason.
COSTELLO: Lawmakers feel that heat, jostling one another to demonstrate they are angry, too.
REP. STEVE ISRAEL (D), NEW YORK: You can run but you can't hide.
REP. ERIC MASSA (D), NEW YORK: It's money that's being taken out of the back pockets of working men and women all over this country.
REP. CAROLYN MALONEY (D), NEW YORK: Well, we are saying that we are obligated to get this taxpayer's money back.
SEN. CHARLES GRASSLEY (R), IOWA: Irresponsible.
COSTELLO: Senator Chuck Grassley called for AIG executives to resign or go commit suicide. This kind of collective rhetoric so toxic "The Washington Post" reports AIG offices in Connecticut have hired guards. Sources tell us AIG employees in New York and London are afraid to come to work.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Executives bonuses...
COSTELLO: Analysts say President Obama must calm the rhetoric, or he'll be next on the voter outrage list. GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: He's the new guy in town. His popularity is over 60 percent. But when you look at our CNN polls about how is he doing in terms of his programs for banking, it's -- a majority disapprove.
JIM VANDERHEI, POLITICO.COM: He has to somehow continue to talk to the American people about what's going on with the economy, do it in a way that's realistic. It's not so gloomy that it pulls the markets down or it's not so optimistic that it seems sort of ridiculous or divorced from reality.
COSTELLO: But that now seems an impossible task. How do you convince these voters AIG's survival matters?
UNIDENTIFIED FEMALE: And I think they should just let them fail.
UNIDENTIFIED FEMALE: How did they feel that they could take all this money when other people, you know, don't even have jobs?
UNIDENTIFIED MALE: I would ask them to step into the shoes of the people that their greed has affected.
UNIDENTIFIED MALE: There are people going hungry so he could have a bonus? That's awful. He should be ashamed of himself.
UNIDENTIFIED FEMALE: What will you say to the executives?
UNIDENTIFIED FEMALE: Quit.
COSTELLO: I think she said it all in that one word.
You know, the verbal shellacking of AIG isn't over. You mentioned, John, CEO Edward Liddy will testify before Congress later today. And at the very top of the agenda, why AIG forked over up to $1 million each to those employees responsible for creating those exotic derivatives that tanked the company.
ROBERTS: It's the question that's pretty difficult to answer and we'll see what Liddy does this morning when he's before that committee. Barney Frank will be leading that. And we're going to be talking, by the way, Carol, next hour here on AMERICAN MORNING.
Thanks very much, Carol. Good to see you.
We know that a lot of you out have something to say about the AIG story, and we want to hear from you. Call into our new show hotline at 1-877-MY-AMFIX. That's 1-877-692-6349. Sound off or ask a question and we just might put that on the air.
CHETRY: All right. Also new this morning, the White House saying Treasury Secretary Tim Geithner didn't learn about AIG's bonuses until last Tuesday, and that President Obama didn't hear about them until last Thursday or until Thursday. And that timeline is raising some eyebrows especially since our Mary Snow was talking about AIG bonus plans as far back as January 28th.
Take a look.
(BEGIN VIDEO CLIP)
MARY SNOW, CNN CORRESPONDENT (voice-over): American International Group is paying bonuses to its financial products unit, that same unit racked up huge losses. A source familiar with the matter puts the figure at $450 million.
(END VIDEO CLIP)
CHETRY: All right, there you heard it. That, again, from a report by Mary Snow at the end of January. Now we're almost through the middle -- we're more than through the middle of March.
Christine Romans is joining us now with more on this. So what's going on?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, let me be clear here. I mean, the financial media people who are reporting on AIG, we knew that there were these big bonuses coming. The thing -- the new thing here is that $165 million of that was paid out on Friday and that the White House stepped up and was trying very quickly, the White House and the Treasury Department last week to figure out a way to reel it in.
Last week, that's after January 28th, when Mary reported this is happening and the number was $450 million of that bonus, some of that bonus have already actually had been paid by then. And actually on March 2nd, Ali Velshi, I radioed (ph) Ali Velshi, he interviewed the CEO of this company, Ed Liddy, and asked him about the bonuses and how that could be appropriate, so we knew these bonuses were coming out.
The White House now and the Treasury Department saying at the very last minute that there was this outrage and this pushback from the administration. Some folks are questioning wait a second, why weren't they working on this months ago, weeks ago?
ROMANS: They've had four times now. Four times they've rewritten this bailout of AIG. Where along the way was this missed? Could this have been handled at any stage of all of these bailouts and why now has it caught the administration off guard?
ROBERTS: All right. Stay with us for just a second here, Christine.
It's something that we've heard from government officials in recent days concerning AIG and that is the phrase "it's too big to fail." And this morning we're taking a closer look at that. Why can't AIG be allowed to go under? Our Ali Velshi has got some answers for you.
(BEGIN VIDEO CLIP) ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Let's just remind people what AIG is. It's one of the world's largest insurers. There are many people who have auto insurance policies, home insurance policies, travel or life insurance policies. As you've mentioned, many people are shareholders in AIG or their mutual funds are, but AIG is much bigger than that. It insures business.
Without insurance, business can't take risk so it insures banks, major airlines. We've talked about this before. The plane that went into the Hudson River insured by AIG, Hollywood movies against their actors or actresses getting injured, offshore oil platforms against hurricanes and things like that.
So it is a very important insurance company, has 74 million clients in 130 countries. So it's a big deal if a company like AIG were to fail.
(END VIDEO CLIP)
ROBERTS: Ed Liddy cited that in an op-ed today in "The Washington Post," where he said had I been chief executive at the time, I never would have approved the retention contracts that were in place more than a year ago, but the calculus was made that it would have been detrimental to the company and perhaps even further detrimental to the economy if they had not have made those payments.
ROMANS: And look, this is a big company. With the two administrations now deciding this company can't be allowed to go down, Ed Liddy was appointed by the government in September. He's going to go on Capitol Hill. We're all calling it "Capitol grille" today. He's going to get a grilling but this is somebody who's working with the government to try to figure out how to stabilize this company and maybe sell the pieces off while they're trying to figure out what to do.
The insurance part of the business, Ali just very well clearly laid out how this company works. The insurance part of the business is stable and predictable. It's this small unit where all these people got these bonuses, the small units that almost took down this big, old state company.
CHETRY: Right. The other thing that Liddy does touch on, the notion of too big to fail. He also went on to say that he thought the structure of the company was too complex, unwieldy and too opaque for component businesses to be managed as one entity.
ROMANS: That's right.
CHETRY: So when you have the CEO saying too big to fail may not be the best, you know, idea for a company either, well, then, you have questions.
ROMANS: He has a very, very difficult job and now he's got all these angry people who are calling. Some of them calling for his head. He's the one who's working with the government to try to fix it. There are also questions why he couldn't have defused this, found a creative way to stop this bonus nonsense before we got to this point.
CHETRY: All right. Well, hopefully he'll be answering that today on Capitol Hill. Thanks, Christine.
CHETRY: And we're going to have much more on the AIG story in the 7:00 hour with a heavy-hitting guest lineup.
We're going to be talking with Iowa Republican Senator Chuck Grassley at 7:20. You remember he suggested, most likely tongue-in- cheek that AIG executives either resign or commit suicide, but he certainly generated a lot of attention with those comments. So we're going to ask him about that as well as what he thinks about the future of the company.
And we're also going to talk at 7:25 Eastern to Congressman Barney Frank. The Massachusett's Democrat chairs the House Financial Services Committee. He's going to be grilling AIG CEO Edward Liddy, but he's also going to be meeting to answer some questions of his own about whether regulators were asleep at the switch and whether or not legislation that was in place perhaps or at least floated to try to prevent this from happening, what happened to that legislation?
So we're going to talk to Barney Frank as well and also Donald Trump weighing in at 7:30 Eastern.
ROBERTS: Shovel-ready, that stimulus speak for projects that can be ramped up very quickly, creating jobs and breathing life into the economy. So, why aren't we seeing that happen?
And a reminder that Gerri Willis is answering your money questions live on Twitter right now. Head to our Web site at CNN.com/AMFix for a link of her page. We'd also love to hear from you on a new show hotline. That's 1-877-MY-AMFIX, 877-692-6349. Sound off, ask a question. We'll try to get it all on the air as the "ROAD TO RESCUE" continues on AMERICAN MORNING.
(BEGIN VIDEO CLIP)
DUKE, CALLER, MILWAUKEE: This is Duke from Milwaukee.
You know, I feel so sick about these AIG people that are so high and mighty while I'm struggling just to stay ahead. That ain't right. I think they ought to drop their pay, just like mine and then let them see how it is to suffer.
(END VIDEO CLIP)
CHETRY: Well, the president's $787 billion stimulus bill was designed to get money flowing into construction projects that would then lead to a stream of new jobs. They call them shovel-ready projects, right? Well, many of them remain stalled and it's actually impacting the economy and your money. Jim Acosta found one concrete example in North Middletown, Pennsylvania, and he joins us this morning with more.
Shovel-ready turning out to be a bigger challenge than originally thought.
JIM ACOSTA, CNN CORRESPONDENT: That's right, Kiran. You put it exactly right.
The Obama administration has said the point of the stimulus is to inject money into the economy right away so the White House has been in search of those shovel-ready projects. But as we found out at this bridge in Pennsylvania, shovel-ready doesn't necessarily mean ready for shovels.
ACOSTA (voice-over): The people driving over the Route 34 bridge in rural Pennsylvania don't know what Harold Bowers knows. He lives right next to the bridge.
HAROLD BOWERS, BRIDGE NEIGHBOR: I go down there to fish, and you can go down there in certain spots you can look up and look right up to the sky.
ACOSTA: You can see through the bridge?
ACOSTA: The bridge is deemed safe for cars. But not pedestrians who run from one side to the other to avoid traffic. Just don't step in that hole.
(on camera): You can literally put your foot into the middle of this bridge, just like that.
(voice-over): Last month, Vice President Joe Biden used the deficient 79-year-old span as a prop to pitch the president's stimulus plan, which includes money to replace the bridge and create dozens of jobs. Biden touted the project as shovel-ready.
JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: You would be able to literally begin to, you know, have jackhammers and shovels out here.
I have the plans in my car.
ACOSTA: But the shovels are still on standby. Local school officials have asked the state to delay demolition of the bridge until the summer break, when school buses aren't using it. Shovel-ready means different things to different projects I guess, is that true?
SCOTT CHRISTIE, PENNSYLVANIA DEPT OF TRANSPORTATION: I guess some people may look at shovel-ready as equipments out there moving things but I would say that there's a lot of things that go in the project. I wouldn't say there's a hitch.
ACOSTA: So far, only four states have stimulus roads projects under construction, with more on the way next month. Civil engineering experts say bids have to go out, contracts have to be awarded. Shovel-ready takes longer than you think.
WAYNE KLOTZ, AMERICAN SOCIETY OF CIVIL ENGINEERS: We're talking about heavy construction. It's not just send a guy out with a pickup truck and a couple of buddies to do some work.
ACOSTA: Harold Bowers who's selling a piece of his property to the bridge project doesn't mind the wait.
BOWERS: As long as it gets done.
ACOSTA (on camera): As long as it gets done.
BOWERS: As long as it gets done.
ACOSTA: Don't leave it like this is what you're saying.
ACOSTA: Now, here is something that came as a surprise to us. The Department of Transportation does not officially use the term shovel-ready, but a spokesperson at the department says get ready for construction projects at a town near you. As one official at the federal highway administration put it, orange, as in those orange barrels and those orange vests, orange, is the new black -- Kiran.
CHETRY: All right.
ACOSTA: You heard it here first.
CHETRY: All right. Jim Acosta for us this morning, thanks.
ROBERTS: Trying to pave the "ROAD TO RESCUE," the White House hit a jarring speed bump this week, the AIG bonus mess. Ahead, our experts weigh in on the payback plan to punish the insurance giant. But will it satisfy an angry America?
And tell us what you think. Call our new hotline 1-877-MY-AMFIX.
It's 18 minutes now after the hour.
(BEGIN VIDEO CLIP)
NANCY, BIRMINGHAM, AL: My name is Nancy Tyce (ph). I'm from Birmingham, Alabama. And I wish someone in Washington would help our president get us out of this mess. I don't have a job. I've lost my securities. I've cashed in my CD. Please, help the president. Thank you.
(END VIDEO CLIP) (COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Twenty- one minutes past the hour right now. It's our special "ROAD TO RESCUE" coverage this week.
We're finding a lot of outrage actually everywhere over AIG's executive bonuses. IReporters flooding our Web site with their comments and ideas as well.
Here's one from Marcus from Canada. He says that if executives can't control themselves, their compensation needs to be capped for them.
(BEGIN VIDEO CLIP)
MARCUS CYGANIAK, CNN IREPORTER: If AIG continues forth with their plans to pay bonuses, the Obama administration should mandate a legislative cap on executive compensations and/or companies like AIG should be released from the bailout plan because of their recklessness and greedy decisions during the biggest financial crisis since World War II.
(END VIDEO CLIP)
CHETRY: All right. Thanks, Marcus, for weighing in.
And we want to hear from you too. You can reach us on Facebook and Twitter. Go to CNN.com/AMFix and follow all the links -- John.
ROBERTS: The Treasury Department has announced an AIG payback plan a one-two punch of sorts, but will it quiet the uproar? We're looking for answers for you this morning. We're joined this morning by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, and Kate Benner. She's a correspondent with "Fortune" magazine.
So this deal would claw back $165 million from AIG. They'd be forced back an additional $165 million and they got $165 million less from the taxpayer. This would have quiet the controversy?
KATIE BENNER, WRITER & REPORTER, "FORTUNE" MAGAZINE: You may quiet the controversy but at the end of the day we're still paying for it. So, I mean, I don't know how long it will actually keep people quiet.
ROBERTS: Yes, because the deal basically is that they used taxpayer money to pay back the taxpayer, right?
LAKSHMAN ACHUTHAN, MANAGING EDITOR, ECRI FORECASTS: Absolutely, and that's what's so confusing and rightly so. I mean, we're all looking at this like this is crazy.
I mean, look, the American people are being asked to do all kinds of sacrifices for the greater good. And then when bandits are making out like bandits alongside of that request... ROBERTS: You're like, what are you going to do?
ACHUTHAN: Come on, give me a break. And so this should have never happened, obviously, right? There are so many bigger issues to deal with than bandits.
BENNER: I think if we step back for a second, there is a lot of outrage around this issue but what it does is it pulls back the curtain on the fact that this is actually how Wall Street has worked for so long. Not just AIG but all of the banking firms, all of the major financial players on Wall Street. When times were good, nobody cared.
BENNER: Politicians look the other way, executives looked the other way. So now everyone is pretending, not citizens, but politicians in Wall Street are pretending to be so outraged and so surprised but anybody who you speak to, if you call anybody who worked at one of the major financial firms they say, of course, this is normal.
ACHUTHAN: This is normal.
BENNER: And what they're trying to do is they're trying to dismantle not only bad business practices but problems at AIG and it's become entangled.
ROBERTS: And here's the other thing with the outrage. Back on January the 28th, our Mary Snow reported that these guys in the financial products division were going to get these big bonuses, even though the division had lost something to the tune of $450 million. Where was the outrage then?
ACHUTHAN: We were -- we were being...
ROBERTS: This is a big surprise to the White House when it happened on Friday. Hello?
ACHUTHAN: Well, it was like remember we all had a gun to our head. If you don't sign on to this big bailout packages, the world will stop spinning. That was, you know -- and so then a few million dollars is like, you know, that's not the biggest thing. I'm talking trillions here, and so you get distracted for a minute. It's a lot of misdirection.
ROBERTS: And here's another interesting one this morning. Henry Paulson has got an op-ed out today. He says the AIG problems underscore the need for regulatory overhaul. In the "Financial Times" he writes, "This system allowed unregulated state organizations and non-bank affiliates of banks and thrifts to originate thousands of risky mortgages and it allowed AIG to build a huge and essentially unregulated hedge fund on top of tightly regulated insurance companies."
Where was he for the last ten years? BENNER: There's an irony there given the fact that he was as the head of Goldman Sachs which benefited richly from that deregulation. But, you know, maybe he's seen what happened and he's just repentant.
ROBERTS: So what's the deal here? All these people looking at this and saying, wow, I better go on top of this populist outrage here or I'm toast?
ACHUTHAN: Well, that's number one is survival and so it would actually be on the right side of this populist move. What Paulson is doing though, however, is something a bit different. You got to read between the lines.
There's the G-20 debate going on, essentially what are we going to do about the world economy, right? And the very developed nations are very interested in a lot of stimulus now with a "T." Right? Global trillions being spent.
The developing nations are saying capitalism may not be that great. Look at all this grief you guys have. Let's look for more regulation and there's -- that's the debate that's going on underneath that Paulson --
ROBERTS: Capitalism is fine if you play within the rules.
All right. Kate and Lakshman, thanks very much. Good to see you this morning.
BENNER: Thank you.
CHETRY: Well, we are looking for answers for struggling Americans this morning. It's part of our special "ROAD TO RESCUE" coverage this week.
In the next ten minutes, we'll be looking at the upside of the downturn talking to two down and out friends who found themselves without jobs but we're able to get back on track, actually turning unemployment into an opportunity. So how did they do it? Well, they're here to share their story.
It's 26 minutes after the hour.
ROBERTS: Welcome back to the Most News in the Morning. A live look right there at Chicago. Thanks to our friends at WLS, where it's 50 degrees, going up to 54 with rain today. That could cause some slight delays for folks traveling through Chicago later on today so keep your eye on that.
Here in New York we're expecting a great day, 60 degrees the high. It's 29 minutes now after the hour. And here are some of the top stories making news right now.
The White House reportedly backing the United Nations declaration to decriminalize homosexuality around the world. "The Associated Press" reports the Obama administration has informed the declaration sponsors that it wants to be added to the list of supporters. The Bush administration refused to back the measure. That was just recently as December. Seventy of the United Nations 192-member countries currently outlaw homosexuality.
Former President George Bush says he will not criticize President Obama and adds he wants him to succeed. The former president made his first public speech since leaving office in Calgary, Alberta, yesterday. He said President Obama "deserves my silence" and he announced plans to write a book about the 12 toughest decisions that he faced as president.
And the national debt is ticked up by another trillion, ka-ching. The Treasury Department confirms the debt has now surpassed $11 trillion. That's the largest in U.S. history -- Kiran.
CHETRY: Well all this week on AMERICAN MORNING, "ROAD TO RESCUE: A CNN SURVIVAL GUIDE." We're looking for answers and solutions to the downturn.
Well, today we're going to introduce you to two former college roommates, Chris Merritt-Lish and Mike Trapenese. They recently found themselves out of work but not out of hope and not out of ideas.
They actually developed a Web site called thecanned.com. And now, Mike, has found his dream job and Chris' web business is booming. So they join me right now with more on how they did it.
Thanks, guys, for being with us this morning.
So, you guys found yourself in a situation. Mike, you lost your job in September. You reconnected with Chris after that and you moved to New York. You were starting your own Web design company, Chris, and you found that business was in a lull, to say the least. So, where did you guys come up with the concept of thecanned.com?
MIKE TRAPANESE, CO-FOUNDER, THECANNED.COM: I guess TheCanned.com was born out of experience. When I went to start filing for benefits and looking to get a health insurance and find a new job, I found out first hand how difficult it is to find that information. I knocked my head together with Chris and he, of course, thought that the solution was a Website.
CHETRY: I guess you're the Web designer, right? But you were basically -- you guys immersed yourselves in figuring all of this out, from figuring out how to get unemployment benefits, as you said, health insurance, but also how to search well for jobs that can lead to, you know, new employment. So how did you take that concept and put it to this Website that other people were actually interested to find out and to look to you guys as well? CHRIS MERRITT-LISH, CO-FOUNDER, THECANNED.COM: Well, we took all the different things that we were looking for ourselves and took all of these resources and put them into one clear and concise Website that presents all of them. Any questions or problems that we had, we figured other people would face and all of the research we did out there really just tied everything together.
CHETRY: All right. So how do you -- how do you make money off that?
MERRITT-LISH: Well, there are advertisements, but the site is currently more so used as a resource for other people.
CHETRY: And, Mike, you said that throughout this process, you ended up being able to find your dream job. How did being unemployed and going through that whole process of job search lead you to your dream job?
TRAPANESE: Well, I found that as I continued to do more and more research on these unemployment resources that I gained the dubious title to my friends and family of an unemployment expert. And I got to pick up some skills and some knacks for the job search that over time I walked into interviews much more confidently, got interviews much more easily, and in the end got the job I was looking for.
CHETRY: That's great and congratulations. And, Chris, your fortunes have also turned around as well, right? You've a lot more business than you did before...
MERRITT-LISH: Oh, yes.
CHETRY: ... and partly from the launch of TheCanned.com. So, what feedback that people gave you -- that this has helped them in the job search?
MERRITT-LISH: Yes. We've been getting spectacular feedback on a daily basis. We get really heartfelt thank you notes from people who have been directed affected by the work. There are a lot of people out there who are looking for these types of resources, and the responses have been very kind.
CHETRY: That's great. I mean, more power to you guys. You took a lemon, I guess you could say, and made lemonade and you're helping other people as well. Consider that it's so overwhelming when you lose your job, let alone trying to navigate all of this. So you made it easier for people. Congratulations and thanks so much for joining us this morning.
UNIDENTIFIED MALE: Thanks for having us.
UNIDENTIFIED MALE: Thank you.
CHETRY: Both Chris Merritt-Lish and Mike Trapanese of TheCanned.com - John.
ROBERTS: As remarkable as it might sound in this economy, the markets are actually showing some signs of improvement. Does that mean that we finally hit the bottom and we're on our way back up? Christine Romans here to answer that question for us.
And a guide for resurrecting your investment portfolio. Personal finance editor Gerri Willis with some dos and don'ts for your 401(k).
It's 33 and a half minutes now after the hour.
GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: You might have seen these best-selling books.
UNIDENTIFIED MALE: Yes, that one looks good.
TUCHMAN: They bring pictures to life when you flip the page, but the man behind the books has been creating other eye-catching art for 20 years. Rufus Butler Seder calls them life tiles, murals that move when you walk by.
RUFUS BUTLER SEDER, ARTIST/INVENTOR: What I'm after is trying to create an experience which totally takes you by surprise.
TUCHMAN: But how do they work?
SEDER: The short answer is it's magic. The slightly longer answer is it's like a flip book. I take an old leaf and pages from a flip book and I scramble them all together and I put them up on the wall and make them animate.
TUCHMAN: Life tiles don't use any moving parts, electricity or tricky lighting, just hours of painstaking work done at Seder's Boston studio.
SEDER: We put about four to five hours into each tile we make.
TUCHMAN: The glass for each tile is cast by hand, then sandblasted, painted and eventually assembled to work in harmony with the hundreds of other tiles that make up each mural.
SEDER: Anywhere from six months to a year is what it takes to produce these.
TUCHMAN: Seder says the hard work pays off when his audience pays attention.
SEDER: I love to watch people react to the work. They don't expect a wall to move. So, they'll be walking down the hallway in a museum or walking outdoors through a zoo and suddenly they'll realize that, those dolphins are starting to move next to me, how is that possible?
TUCHMAN: Gary Tuchman, CNN.
ROBERTS: Welcome back to this special "ROAD TO RESCUE" edition of AMERICAN MORNING.
And signs of encouragement overseas right now. The CNN money team reporting green arrows from Europe to Asia. Stocks, they're up on the heels of a strong day for Wall Street. The Dow is up for the fifth time in six days closing out 179 points. Wow, big green arrow there.
The big question this morning --how do we know when the market has hit bottom and when are we finally going to see a turnaround. Our Christine Romans here with the final part of her series "Rock Bottom."
Good morning to you.
ROMANS: And that's, John, what we all want to know, right? Is the worst behind us? We have looked at jobs and housing. Today, let's talk about the stock market and your investments.
ROMANS (voice-over): The crash of 2008 lives in to 2009. How bad is it? To really assess the damage, watch the S&P 500. It measures 500 stocks from all sectors. Since its peak, the S&P has crashed 57 percent. That means of the past 15 bear markets, only 1929 was worse.
ARTHUR HOGAN, JEFFERIES & COMPANY: This has been one of the more painful months of any investor or any long-term saver has had to live through.
ROMANS: Vast amounts of wealth for savers and investors has been wiped out. Fidelity Investments says your 401(k) balance last year lost on average 27 percent. This year, so far, no better.
How bad could it get? That depends on how soon the consumer regains confidence, lending returns to normal and company profits recover.
HOGAN: The velocity of the bad news, the velocity of the selling, the velocity of the economic slowdown is decreasing. So I think that's what happens at the bottoming process and then the cycle starts to turn.
ROMANS: Some believe the market is bottoming out now, but it can take months. Doesn't mean it can't make new lows. So, when will it turn around?
HOGAN: I think it's important to sort of stay focused on that. Be patient. I think that as this year winds down and we work our way through the fourth quarter, things will start to look more constructive.
(END VIDEOTAPE) ROMANS: Fourth quarter, Art Hogan says the stock market will likely perk up. Maybe three to six months before the economy does. So, a lot of people saying be patient. It's hard to be patient when you're, you know, white-knuckled watching the market like that.
ROBERTS: But at least in the last few days there does appear...
ROMANS: That's right.
ROBERTS: ... to be a little bit of confidence out there.
ROMANS: A little bit of confidence.
ROBERTS: Which is nice. You kind of feel the mood lifting just a little bit.
ROMANS: The gloom lifting a bit. That's right. I think you're right. There has been a change over the past week or 10 days. You're right.
ROBERTS: Wouldn't it be nice if it helped? Christine, thanks so much.
CHETRY: All right. You may have watched your 401(k) collapse. Don't throw in the towel yet. Our personal finance editor Gerri Willis has some important tips for building your investment portfolio back up again. She's going to join me in just a moment.
Also a reminder -- call our new show hotline. It's 877-MY-AMFIX, and leave us a message about anything that's on your mind as this "ROAD TO RESCUE" edition of AMERICAN MORNING comes right back.
(BEGIN VIDEO CLIP)
MIKE COURTLOVE (ph), MONTANA: This is Mike Courtlove (ph) in Montana. I'd like to know what all of these wonderful companies that we're bailing out have in plan to pay back the U.S. people, not the U.S. government. What are you guys going to do -- offer a discount to us, or are they going to buy some insurance for us, or are they going to send some food to our house?
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
JON STEWART, HOST, "THE DAILY SHOW": Look, maybe enrage -- maybe enrage isn't your thing. Why not scare AIG with some consequences?
OBAMA STATES: I've asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses. STEWART: We're never getting our money back.
(END VIDEO CLIP)
CHETRY: That's "THE DAILY SHOW"'s Jon Stewart weighing in on the outrage over the AIG bonuses.
And welcome back to our special "ROAD TO RESCUE" coverage. This week we're tackling the economy helping you and your family survive the money meltdown.
And right now, we're turning our attention to your 401(k). Gerri Willis joins us now with a survival guide to help you get back on track.
This is for people who say, you know what, I checked and it's way down, now what do I do?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: OK, let's talk about how down it is.
I think most people don't really understand what 401(k) values are in this country. Guess what? The median value for a 401(k) held by people who are saving money for retirement, right now $15,000, just $15,000. I think that would surprise a lot of people out there who would expect that most folks have more money in their 401(k). So, if you think your balance looks bad, take a look at that number.
Bottom line here, you don't want to throw in the towel. You've got to know what you own. You've got to check in. Make sure you understand what you have in that 401(k). And a little ray of sunshine here, the money management firm Leuthold Group, reports that stocks returned no less than 7.2 percent and as much as 15.6 percent annually in the decade following a long-term decline, and boy, are we going to be entering that decade.
Here are some 401(k) dos. Look, you've got to keep investing. Even if your employer has cut your 401(k) match, you want to keep putting money away for retirement. In fact, in that case, you want to set even more money aside.
You need to get diversified. Keep in mind that 401(k) investing doesn't just mean stock investing. I think we've got it in our heads that 401(k) means buying stocks. You've also got to have bonds, even a little cash equivalent in it.
Fix the mix. Most of us have seen the portfolio change over time. Stocks have tanked. You want to deepen your contributions to stocks to make up the difference and remember, asset allocation is key for the long run.
CHETRY: All right. So what are the things people should avoid when it comes to 401(k)'s?
WILLIS: Everything they've been doing lately, which is not putting money in. People have been tapping their 401(k)'s for non- emergencies and emergencies. Look, the cost of using your retirement money before retirement -- it's incredible.
If you're less than 59.5 years old and you take say a hardship withdrawal, you'll pay a 10 percent penalty, plus you'll pay income tax on what you took out. If you take out a loan against your 401(k), you lose your job, guess what? You have to pay the whole thing back pronto and you're on the hook for the 10 percent penalty if you're less than 59 and a half years old.
Don't leave your 401(k) behind. If you lose your job, if you leave on your own, you want to roll that money over into an IRA.
And don't lose heart. We're all going to retire. We're going to make it. People do it all kind of different ways. You know, some people borrow money from their kids even. I know that sounds horrible but it happens all the time. You know, some people continue working in retirement. There's a lot of that going on, too. And I don't know about you, but I think I'll probably continue to be active even when I'm retired.
CHETRY: You've got a long way to go before you have to worry about that.
WILLIS: Feels like -- looking at my balance right now, I hope I have a long way.
CHETRY: Gerri, thanks.
WILLIS: My pleasure.
ROBERTS: So you're dining out less and you're eating in more. But do you still feel like your food budget is out of control? Why you're paying higher prices in the checkout line, ahead.
Forty-seven minutes now after the hour.
America's new punching bags.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Let 'em eat cake, CEOs.
(END VIDEO CLIP)
ROBERTS: Jeanne Moos on the new trend -- mocking CEOs.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We've struck a cultural chord.
(END VIDEO CLIP)
ROBERTS: CEO bashing. If you're a fat cat, take cover, ahead on the Most News in the Morning.
ROBERTS: Welcome back to our special "ROAD TO RESCUE" coverage here on AMERICAN MORNING.
The AIG bonuses struck a nerve with Americans who are angry over bailouts in the first place. Corporate CEOs have now become national punching bags. The new favorite target of late night comedians and at least one clever ad campaign. Our Jeanne Moos is following it all.
JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (voice-over): These days...
UNIDENTIFIED FEMALE (singing): AIG against the world.
MOOS: It's the world against CEOs. Take that corporate jet and shove it.
UNIDENTIFIED MALE (SINGING): The Feds said them jets got to go. Let them eat cake -- CEOs.
MOOS: It seems like everyone is mocking those poor CEOs -- even the nice Canadians at this CBC comedy show with their "Sponsor an Executive" skit.
UNIDENTIFIED FEMALE: He can barely afford Napoleon brandy. For only $3,700 a day, you can ensure that Wayne and CEOs just like him will still get the bonuses they already approved for themselves.
MOOS: And now, inspired by that moment when auto company CEOs were grilled by a Congressman asking...
REP. GARY ACKERMAN (D), NEW YORK: ... raise their hand if they flew here commercial. Let the record show no hands went up.
MOOS: ... now a viral ad campaign has gone up.
UNIDENTIFIED MALE: If you're not a CEO, please stop watching this video immediately.
(EXPLETIVE LANGUAGE) you still there?
MOOS: JetBlue presents the CEO's Guide to Commercial Jetting. Now that they've had to dump their private jets, they need lessons in dealing with airport terminals.
UNIDENTIFIED MALE: Unlike the terminals where you parked your old private jet, T5 is filled with regular people. Relax, Carl. Think of them as shareholders.
UNIDENTIFIED MALE: JetBlue can get you to many cities where you already own homes or hide money -- Aruba.
MOOS (on camera): The creators of the ad campaign even found inspiration in a gossip item in the pages of "The New York Post."
(voice-over): It told of spotting the former chairman of Lehman Brothers getting instructions, apparently from his driver, on how to work a JetBlue ticket kiosk. That concept ended up in the ad campaign.
UNIDENTIFIED MALE: And there you have it -- easier than writing off a toxic asset.
HARVEY MARCO, CHIEF CREATING OFFICER: How can we make this as snarky as possible?
MOOS: These two are from the JWT ad agency.
UNIDENTIFIED MALE: And we've struck a cultural chord.
MOOS (on camera): You're just mocking those CEOs.
UNIDENTIFIED MALE: Sorry. We're having fun.
MARCO: Yes. We're not sorry. We've got to do it.
MOOS (voice-over): Got to show the CEO what the inside of a commercial plane looks like.
UNIDENTIFIED MALE: Every seat has its own private and exclusive entertainment system.
UNIDENTIFIED FEMALE: Carl Davis embezzled $48 billion from his company's retirement fund.
UNIDENTIFIED MALE: Oh, Carl, that's OK.
MOOS: With so many companies in the toilet, that's where the fictional CEO ends up.
UNIDENTIFIED MALE: JetBlue is the next best thing to private air travel.
MOOS: Jeanne Moos, CNN...
UNIDENTIFIED MALE: Cheers!
MOOS: ... New York.
ROBERTS: Got outrage?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We were contractually obligated to give these bonuses. This is asinine.
(END VIDEO CLIP) ROBERTS: We've got the guest front and center in the uproar. The senator who suggested suicide for AIG for employees, and before Congressman Barney Frank grills AIG's CEO this morning, he's on AMERICAN MORNING live.
Plus, twittering, blogging, taking your calls, no one's more connected to you. This is the "ROAD TO RESCUE" at work, only on the Most News in the Morning.
CHETRY: Fifty-six minutes past the hour. Welcome back to this special "ROAD TO RESCUE" edition of AMERICAN MORNING.
Our iReporters coming up with their own ways to save some green these days. Here's Alison McKee. She shows us how to save by brown bagging it. She says this lunch was packed by her husband and in the end it only cost $2.35. There you see it. Pretty creative. Good job.
Well, it seems that prices at the grocery store still aren't giving people enough relief. In fact a new CNN Opinion Research Corporation Poll found that nearly a third of you say that you've cut back on necessities like food or medicine in the past six months.
So why are grocery store prices on the rise? Our Jason Carroll is looking into that for us this morning.
JASON CARROLL, CNN NATIONAL CORRESPONDENT: Yes. A lot of people asking that question. Basically, when it comes down to it, it's a struggle between the grocery store chains and the food manufacturers. If you've gone to the store lately and you've wondered why in this weakening economy the prices for things like cereal or bread haven't gone down, well, we finally have some answers for you.
CARROLL (voice-over): They may not know it, but as shoppers across America head to grocery stores, they're walking right in the middle of a war zone, a pricing battle between stores and food manufacturers that supply many of the products on the shelves. The casualties? Shoppers, who are venting about high food prices.
UNIDENTIFIED FEMALE: Isn't the customer always screwed? I don't know. That's a bit seems like to me.
UNIDENTIFIED FEMALE: You know what's really gone up, string beans. String beans are like $1 more a pound.
UNIDENTIFIED FEMALE: When I see the price of some of the fruits that are sky-high.
CARROLL: The major grocery store chains we contacted for this story either refused to talk or didn't respond. But last month, Safeway's CEO told investors, "It's disingenuous to consumers that all commodity costs are coming down, interest rates are coming down, everything is coming down, and the national brands are taking their prices up."
Food manufacturers say they charge high costs because their own expenses have gone up. Consumers wonder why, when prices of commodities such as fuel, corn and wheat have all been going down. Why then aren't food manufacturers turning those savings over to the stores they sell to?
UNIDENTIFIED FEMALE: They should be lowering their prices because of the economy.
CARROLL: Manufacturers such as Nestle and Kellogg refused requests for interviews, but Kellogg gave a statement saying, "In spite of recent drop in some commodities, prices for commodities are still well above historic averages.
FRANK LUBY, PARTNER, SIMON KUCHER & PARTNERS: I know everyone's going to look at commodity numbers in the newspaper and see the prices have come off of the highs that they were at. But the problem is, it's very hard for the food companies to sync up those price spikes that they saw early in 2008 with their decisions to change prices.
CARROLL: Consumer experts say manufacturers worry if they drop prices too soon, the costs of commodities could unexpectedly rise again.
They don't want to have to keep on pulling back and then raising prices again. Again it does cause some bad PR so they had to make some painful increases in 2008. They don't want to draw those back rate quickly in terms of permanent price cuts because of the uncertainty in the market.
CARROLL: Well, some economic experts predict both the manufacturers and grocery store chains will somehow get in sync and lower their prices possibly in the next several months.
In the meantime, what should a consumer do to save? Well, try buying generic or some of those private labels out there, that's probably one of the best ways you can get into the store, come out and saving a little bit of money.
CHETRY: Yes. All right. Good stuff. Thanks, Jason.